Silicon Valley businesses have opened their wallets to change San Jose’s pension system and, they hope, bolster the city’s finances.

Venture capitalists, real estate developers and public works contractors — not to mention tech CEOs and the chief executive of Virgin America — are aiming to influence how San Jose voters decide Measure B on June 5.

Measure B would require city workers to contribute more money to keep current benefits under the pension plan, temporarily suspend retirees’ cost-of-living adjustments during a fiscal emergency, and require voter approval for any increases in benefits.

Supporters say more money for city services would make San Jose a more desirable place for businesses to operate and for employees to live, and save money for contracting opportunities. Moreover, it could help improve the city’s credit rating, trimming borrowing costs when City Hall needs money for projects.

The city is spending $245 million on retirement benefits this year, up from $73 million a decade ago, and benefits now consume more than 20 percent of the general fund, according to the office of Mayor Chuck Reed, who is helping lead the Measure B campaign. Over the past decade the city’s work force has also dropped by 28 percent, to 5,400, says Reed’s office.

Measure B backers say money spent on benefits could go to schools, public safety and other services.

Opponents, however, point out that city workers have already taken steep pay cuts. They say the measure could force city employees out of their homes, and the ballot item is unfairly “blaming” librarians, building inspectors and other workers for San Jose’s fiscal woes.

As of May 19, the campaign to support the measure had received about $638,000 in contributions this year. A separate political action committee formed by the Silicon Valley Taxpayers Association had additionally raised $45,000.

Barbara Lymberis, president of the Santa Clara County Association of Realtors, said local residents expect strong city services. The passage of Measure B, she said, would help ensure that “people are moving in and not moving out.” The realtors association donated $25,000 to support the measure.

Lymberis, a San Jose-based broker, has not heard of anyone leaving the city because of slacking services, nor has she seen a drop in home values due to that reason.

But “it will have an impact,” she said.

Matt Mahood, president and CEO of the San Jose Silicon Valley Chamber of Commerce, said government needs to provide the “environment” for economic growth. To attract employees, he said, companies need to operate in an area where people want to live, with strong services and amenities.

The chamber donated $64,500 this year for the Measure B campaign.

“To have a strong economy, government has to work,” Mahood said.

Business dollars flow

Many campaign donations supporting Measure B have come from the real estate and construction sectors. New projects often need approval from local government, and those industries typically donate to local elections.

Other industries are also giving money. The Flea Market Inc., which runs the San Jose Flea Market on Berryessa Road, gave $15,000. Samaritan Medical Center, which operates 18 medical office buildings near San Jose’s Good Samaritan Hospital, donated $7,500 this year.

Virgin America CEO David Cush gave $2,500 to the campaign. City officials have said Cush is looking to expand Virgin to Mineta San Jose International Airport next year. A spokeswoman for the Burlingame-based airline said Cush was unavailable to comment.

The campaign also got $2,500 from Michael Grimes, a top investment banker with Morgan Stanley in Menlo Park. He helped the firm snag the lead underwriter spot on Facebook Inc.’s initial public offering of stock last month. A spokesperson for Morgan Stanley said the firm declined to comment.

San Jose State University political science Professor Larry Gerston said the private sector would get “indirect” benefits from lower pension costs at City Hall. In addition, if the city can better provide services, there won’t be “as much of a human cry” to raise taxes.

“That’s the hope,” he said.

Credit rate worries

Meanwhile, San Jose has received a number of credit-rating downgrades this year. The ratings agencies were concerned in large part by City Hall’s increased retirement costs and history of budget shortfalls. After a decade of deficits, San Jose is expected to have a $9 million surplus in the year starting July 1.

San Jose still has a high credit rating on its various debts — in some cases just one or two notches below the top — so City Hall is unlikely to face wary investors if local officials want to borrow money.

Moody’s Investors Service, for one, downgraded San Jose’s general obligation and lease revenue bonds by one notch in March and assigned them a “stable” outlook.

The passage or failure or Measure B would not immediately affect San Jose’s credit rating, but the city must find ways to control its retirement costs without threatening services, said Michael Wertz, an analyst with Moody’s.

“We’ll be paying attention to the results,” he said of the ballot measure.

Eli Segall can be reached at 408.299.1829 or esegall@bizjournals.com.

Eli Segall covers finance, law, sports business and economic development at the Business Journal. His phone number is 408.299.1829.

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